AT&T is building a hardware device to move traffic over the network it uses to provide telecom services to its customers, said two people with knowledge of the project, potentially depriving longtime supplier Cisco Systems of millions of dollars in annual sales.

The switch project, which hasn’t been previously reported, is part of AT&T’s broader goal of replacing its older networking equipment from companies like Cisco with less expensive alternatives from Asian manufacturers. The shift represents a big blow to Cisco, which for years could count on steady business from AT&T, one of its largest customers.